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Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

495.0000 SALE

Annotation 495.0452

(a) IN GENERAL—DEFINITION

495.0452Sale if Customer Agrees to Pay. A retailer sends one volume of a four volume recording to potential customers on a "free will" offering basis. Accompanying the recording is a letter which states in part "we are very much aware of today's marketing ways to get the dollar, so we are leaving the free will offering up to you. There is a cost to produce and mail these recordings to the few that are receptive, so if you can afford the cost printed on the back of the jackets we would appreciate the assistance in helping us produce more material to companion with in our moments of quiet. If you cannot afford to offer anything at this time, but feel the need of these recordings to companion with, don't hesitate to write and ask for them."

The foregoing statement is regarded as an offer. When the customer accepts the offer by agreeing to pay the amount requested or by the act of sending money, an enforceable contract of sale is created. The transaction is contractual in nature because a valuable consideration (the price) is bargained for and received in exchange for the process to deliver the merchandise. In these cases, where the recipient agrees to pay a stated amount for the recordings, sales tax is due measured by that amount.

The fact that some persons receive the recordings without agreeing to pay the price does not warrant a finding that no sale occurs in instances where a customer agrees to pay a certain amount for the merchandise. In this situation, the recipients receive the merchandise pursuant to the alternative promise to make them a gift of the merchandise if they are unable to pay the price. Such transactions are legal and distinguishable because no valuable consideration is given in exchange for the promise that allows the recipients to retain the merchandise. Since there is no legal duty to perform, there is no contract and no sale to which the tax can be applied. 7/7/71.

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